How To Price Clean-Up Work When the Records are a Mess
Apr 30, 2019How do you value price clean-up work? You’d be shocked by how many times I get asked this.
It’s a tricky thing to do, but I have the solution.
Just so we are clear - by clean-up work I mean sorting out the books and records, perhaps when we take on a brand new client, and they haven’t done their bookkeeping for six months.
We need to fix that before we can start doing the current work. How do we do that?
I’m going to share with you 4 key ideas that you should think about when pricing clean-up work.
You can watch the video here.
#1 - Value Price
What’s the value of clean-up work?
That’s something you will have to communicate to the client.
They don’t see any value in the process of doing the clean-up work. So, you need to communicate to them how much value it will give to them if you were to clean it up for them.
It may be they have come to you for help with clean-up work because they are behind, they’re getting pressure from the tax authorities, they’re not sure who they should be invoicing, they’re not collecting their cash - it could be anything.
Express the fact that you are going to take away all the hassles, stresses, and problems that they are currently facing.
You need to understand the pain they are going through, then paint a picture of what their life will be like once you have helped them. Tell them all the benefits they will get.
#2 - Menu Pricing
Give the client three options to choose from.
You might decide that your normal clean-up process is the middle package. But it may be you have an entry-level clean-up package where the client does some of the work.
When you reveal the price, if it turns out your middle package is too expensive for that client you can offer them this cheaper package. It makes your life easier if they are doing some of the work and they get a price that they are happy with.
At the other end, you can make a more expensive premium package, and you include expedited service, or build in some training so they don’t get into a mess again.
You can always create different versions of the clean-up package, then let the client choose which one they value the most, and let them choose a price they are willing and able to pay.
#3 - Factor in scope
If you are working with a new client you probably have no idea how much clean-up work there is going to be.
I’ve spoken to quite a lot of accountants and bookkeepers who tried to value price their clean-up work but found it all went horribly wrong because it was a bigger mess than they had thought. So they resorted back to old fashioned time-based billing, which is a shame.
Their problem was that they hadn’t properly scoped.
You need to use your expertise and experience to work out all the things that could potentially go wrong.
You need to be really sure about the state of the books and records so that you can give an appropriate value-based price that also ensures you make a profit on the job.
#4 - Break down the work
What if we have no idea what the scope is? One of the problems with clean-up work is that we don’t really know the extent of the mess until we get started.
Any project that has uncertainty about the scope can be broken down into separate phases.
The first phase might be a diagnostic phase where we charge a price for going in and doing some preliminary work. In this phase, you would only do enough work to identify the full extent of the problem. Then you can present a brief report to the client setting out what you have found and what your recommendations are.
If the client wants you to fix those things, you can then do a value-based price for phase two of the project.
If you found this valuable and would like to learn more about value pricing, I run a free live online training session every month with a topic chosen by you. Attend live and you can ask me any questions you have. Click here to register and I will send you an invitation to the next session.
Wishing you every success on your pricing journey
Mark Wickersham
Chartered Accountant, Public Speaker and Author of Amazon No.1 Best Seller “Effective Pricing for Accountants”